Essent's Q1 2025: Unpacking Contradictions in Pricing Strategy, Capital Deployment, and Cure Rate Expectations

Macroeconomic impact on pricing strategy, capital efficiency and deployment, economic impact on pricing strategy, and cumulative cure rate expectations are the key contradictions discussed in Essent's latest 2025Q1 earnings call.



Financial Performance and Investments:
- Essent Group Ltd. reported net income of $175 million for Q1 2025, compared to $182 million a year ago, with a diluted per share earnings of $1.69.
- The slight decrease in net income is attributed to lower originations and affordability challenges impacting new insurance written.

Mortgage Insurance In Force and Persistency:
- U.S. mortgage insurance in force reached $245 billion, a 3% increase year-on-year, with a persistency rate of 86%.
- The growth in mortgage insurance in force is driven by elevated persistency due to higher mortgage rates, which support short-term stability.

Capital Management and Shareholder Returns:
- Essent Group repurchased nearly 4 million shares for over $200 million year-to-date and declared a common dividend of $0.31 for Q2 2025.
- These actions reflect Essent's commitment to capital management and returning excess capital to shareholders, supported by a strong balance sheet and liquidity position.

Investment Yield and Cash Position:
- The holding company's consolidated cash and investments stood at $6.4 billion, with an annualized investment yield of 3.8%.
- The strong cash position is supported by a new money yield over 5% and stable investment rates, contributing to Essent's financial stability.